Camden council discusses quarterly income tax payments

CAMDEN — The Village of Camden Council is looking to repeal a motion they made during a council meeting on Thursday, June 1. During the council meeting on Thursday, July 6, a representative from Regional Income Tax Agency (RITA) attended the meeting to advise council on that previously made motion.

The issue at hand is the village income tax, which per federal guidelines must be paid quarterly. The council set out during their June meeting to change the required date to be once per year. Fiscal Officer Rebecca Wilson advised, “Our revenue will decrease changing this. You’re paying quarterly, just like a lot of people are, but that’s going to change if you don’t pay that. The money that we’re getting on a monthly basis is going to decrease greatly.”

However, council member Melissa Shull was worried about village residents who didn’t pay quarterly and as a result had to pay interest and penalties. She wanted the rule to be that if a village resident pays their tax by April 15 then they will not be charged a fee. On June 1 she said, “Whatever state reps passed this, did an injustice to the communities. But all we need to do is say when this rule will take effect. For this year, if people paid their taxes by April 17, they shouldn’t face a penalty.”

“We just want our village citizens to pay by the tax date,” she continued. “If they pay by the tax date, we don’t want to penalize them. I think a lot of people thought that it was due then anyways. They didn’t think it was due at the end of the year.”

Shull was also worried about penalties paid in past years, but Wilson suggested the new rule should only be in effect for 2017 tax filings. “I don’t think you should change it in the middle of our budget year for the village right now,” she advised. “We already have projects going on.”

After much discussion, Shull made the following motion, “I make a motion that for the tax filing year of 2017 and going forward, that if they pay by federal guidelines, there is no penalties or interest charged.”

Council approved the motion.

Following this decision, Lora Gischel with RITA attended the council meeting on Thursday, July 6, to give her take on the approved motion. She explained that many years past, slate legislators tried to make municipal income tax uniform, in doing so they focused on estimated payments and eventually decided upon quarterly payments.

Quarterly payments provided a year long cash flow, instead of one lump sum once a year.

“The only reason you would not make quarterly payments, is if you do not make more than $1,000 a year,” she explained. “Does the village have a right to not require quarterly payments? They do. It’s actually in this application here, I’ve provided it for you. Do we recommend it? No. Same reason that the IRS doesn’t do it.

“Here’s what’s going to happen — you won’t have the cash flow,” she said. “You won’t be able to make payroll. That’s typically what happens to the communities. Your businesses here in town will continue to withhold, because they’re required to. Any one who works outside of this community will not have to withhold, although they can if they want to as a courtesy. The other option is to make quarterly estimated payments. All of those who work outside who are making estimated quarterly payments. That money that you’re getting right now? You’re not going to get that until June of next year.”

Shull said, “Here’s what we said, people don’t want to make quarterly payments. There are some people who want to do this and they’re doing it and they will continue to. There are others that aren’t. I talked to an individual the other day. They took their taxes to a preparer. I know we gave grace the first year, but my son? His employer said that he wouldn’t do that.”

Gischel confirmed that the employer isn’t required to withhold anything if they are not working within town, however, he is required to make estimated quarterly payments if he is going to owe more than $200 for that tax year. The taxpayer can choose not to, but they will be paying a penalty.

“We already voted that if somebody pays their taxes at the same time that the federal government has set the standard to pay by this date, if they pay what they owe in RITA by that date, then they will not be penalized,” Shull explained.

“What I’m sharing with you tonight is that the Federal Government requirements are not different,” Gischel said. “The only thing that is different with the federal government is that first line. The federal government says that if you owe more than $1,000 a year than you are required to make estimated payments. The municipalities, by Ohio legislators, say that if you owe more than $200 than you are required to make those same estimated payments.”

Shull responded, “We as council have the ability to fix what I thought was a disservice to the tax payers. We’re not here to penalize the people of the Village of Camden.”

“Now, as far as your estimated payments are concerned,” Gischel said. “If you guys are in a situation financially where you can operate an entire year without capital coming in, God bless you. Most municipalities in the State of Ohio cannot do that and that is what your legislators are actually protecting you from. So while you think it is a disservice, there are many municipalities out there that are in a fiscal crunch and emergency because of the cuts that the legislators have made.”

Doran responded, “I would just ask everyone on council, could you get by being paid once a year?”

“We don’t recommend this change, but you can do whatever you want,” Gischel reiterated. “There are multiple reasons we don’t recommend it. One is, it’s not fair. You’re going to have tax payers living next door to each other one is paying quarterly and one is paying once a year. Second thing is, if you can absorb the impact great, but you are going to critically change the cash flow to this village. The only thing you’re guaranteed to get is the income from any of the businesses that have employees here.”

“When we voted to change the date, I thought we were changing the date to square up more in line with the IRS. I did not know, until Rebecca Wilson told me that it was going to stall our cash flow. I didn’t know if was going to change our cash flow to once a year. I would not have voted for that and I don’t think any other reasonable person would have either,” Doran explained. “When we have a full council, I would rescind that in a minute.”

That seems to be the plan. According to Wilson, council is waiting for the full council to be present to vote on whether or not to resend that previously made motion.